August 10, 2020

Nifty Weekly Overview for 13th August 2020 Expiry

By Roy

Last week, as I mentioned in my post, Nifty was range bound. I clearly mentioned that downside was limited till 200 day moving average and on the correction Nifty corrected exactly till that point and then regained its lost grounds. The last weeks range was 11000-11300 and Nifty respected the upper boundary. My strategy to sell the 11500 call and 10650 put yielded me a return of 1.60% in 6 days.

You can go through my post

Now what this week looks like. Let us go step by step.

Nifty Daily:

For me story remains same. 11300 looks like a stiff resistance. Today, Nifty tried to breach that level and sustained but the closing was 30 points below 11300. Nifty has stayed in 11000-11300 range for quite some time. This means, whenever Nifty gives a break out from this range, either upwards or downwards we can expect a trend in that direction. To be frank I sold 11500 call for 13th August expiry.

Now what gives me the courage to do that ? The Bank Nifty. The Bank Nifty to me looks mildly bearish. Without the help of Banks, Nifty is unlikely to take out 11500 in 3 days.

The downside story also same for the time being. 11000 first support and 200 DMA 10880 second big support. I have sold 10700 Put on the downside.

Nifty Weekly:

On the weekly chart, the rally seems to exhausting. Still holding itself above the last week candle but the energy is on the ebb. Nifty Vix is touching new lows, means FOMO is in full swing. The Big Daddy Reliance which is looking strong on its charts is holding the Nifty up as banks are unable to give any considerable support.

The New Darling:

Nifty Pharma Chart

Nifty Pharma is back to its crucial level of 12000. It was there in 2015 then again in 2016. In 2016 it tried to breach that level but failed and resumed its downward slide. Can it gather enough steam this time around to close beyond 12000, I think it can.

Weekly Expiry Strategy:

I have sold 10700 Put option of Nifty at 10 and Sold 11500 Call option of Nifty at 15.90. Both for 13th August, 2020 expiry. I sold this strangle on Friday.

Disclaimer: This is not a buy or sell recommendation. I am not a SEBI registered advisor. I sell options and quite aware of the risk associated with it. I have kept surplus funds for any adjustment that may be needed due to evolving market conditions. This post is only an information not a recommendation.